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Discussion Paper Details

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Title: Outsourcing, Unemployment and Welfare Policy

Author(s): Christian Keuschnigg and Evelyn Ribi

Publication Date: December 2007

Keyword(s): Outsourcing, redistribution, social insurance and unemployment

Programme Area(s): Public Economics

Abstract: Outsourcing of labour intensive activities challenges the welfare state and undermines the protection of low-skilled workers. The stylized facts are that profits are concentrated among the high-skilled, involuntary unemployment is mostly among the low-skilled, and private unemployment insurance is missing. This paper analyzes the effectiveness of redistribution and social insurance and characterizes the optimal welfare policy when heterogeneous firms can outsource labour intensive components to low-wage economies.

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Bibliographic Reference

Keuschnigg, C and Ribi, E. 2007. 'Outsourcing, Unemployment and Welfare Policy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6605